Agenda item

This report informs the committee of the Dedicated Schools Grant (DSG) deficit which has arisen mainly from overspend against the High Needs Block (HNB) of the DSG that is used to support children and young people with Special Educational Needs and Disabilities (SEND).

The report provides the historical context to the deficit and an update (as requested by the Committee) on the progress that has been made against the DSG Deficit Management Plan to address the deficit along with an update on Brent’s participation in the Department for Education's (DfE) Delivering Better Value (DBV) in SEND programme, aimed at supporting a reduction in expenditure against the High Needs Block of the DSG.

(Agenda republished to include the update report on 18 July 2024)

Nigel Chapman (Corporate Director of Children and Young People, Brent Council) introduced the report, informing the Audit and Standards Advisory Committee of the Dedicated Schools Grant (DSG) deficit which had arisen due to overspend against the High Needs Block (HNB) used to support children and young people with Special Educational Needs and Disabilities (SEND). The report also provided the historical context to the deficit and detailed progress made against the DSG Deficit Management Plan to address the deficit.

In considering the report the following key issues were noted:

·             The Committee noted that the deficit addressed in the paper was not a unique challenge to Brent alone, with many local authorities holding similar or higher deficits. The deficit challenges were described as a national systemic issue in the way local authorities were funded to support children and young people with SEND. The primary factor driving the deficit was the increase in demand for services in recent years, with Education Health and Care Plans (EHCPs) rising 44% in Brent over the past 4 years. This was due to more children’s needs being identified, and more children’s needs being met within mainstream settings.

·             Officers advised members that the situation was not improving and national reform was essential, with the previous government setting out a SEND Improvement Plan in 2023 to meet the challenges. The plan noted the systemic nature of the problem, partly driven by market issues and a reliance on the independent sector to provide placements for children in school where the local system could not meet demand. Brent was part of a Department for Education (DfE) programme trying to mitigate some of those pressures through the ‘delivering better value’ programme and had received DfE funding to mitigate pressures on the HNB.

·             There were a number of activities in place to manage demand more effectively and reduce growth in EHCP numbers by supporting families at an earlier stage. Brent was building more capacity in the system, with 400 additional placements and a new special school being built which would be managed by the RISE Partnership.

·             In terms of scrutiny of the deficit position, this happened internally within the Council with the Section 151 Officer taking part in regular challenge sessions with the Children and Young People department to consider progress. The Schools Forum considered the role of the DSG and pressures in the system, and there was quarterly reporting to the DfE on progress against the deficit management plan. In addition, the department would be attending the Community and Wellbeing Scrutiny Committee in September 2024 which would review broader issues in relation to SEND.

·             Minesh Patel (Corporate Director of Resources and Finance (and Sec 151 Officer)) addressed factors relating to the statutory override set out by government to allow councils to carry a deficit reserve on the balance sheet. Brent’s deficit was around £13.5m currently. He noted that when the override came to an end in 2025/26, the council would need to have funds in the General Fund to offset the deficit accumulated at that time. Currently, because the DSG was a ringfenced fund paid for through government grants and distributed to schools or education settings, the General Fund did not fund the DSG or its beneficiaries; however, if the government no longer provided that override after 2025/26 and did not write-off those deficits then the Council would need to offset the deficit through the General Fund. There were Councils in England with deficits that were substantial, some up to £80m, where paying the deficit would leave those Councils with no reserves, resulting in an influx of Section 114 notices. Officers were unsure whether the government would continue the override or write-off deficits, but highlighted the need for a system that would address those future challenges. Currently, Brent’s Deficit Recovery Plan was allowing the deficit to remain stable and not increase, and officers were unaware of any Councils who had been able to reduce or repay their deficit.

The Chair then invited the Committee to raise questions on the report, with the responses summarised as follows:

·             In response to a query regarding the exact causes of increased costs, Nigel Chapman noted that every EHCP came with additional costs for funding the need of each child, the cost of placing children within special schools, and the cost of support services for children with EHCPs such as Speech and Language Therapy and Occupational Health. Alongside that was the cost of equipment and required levels of staff. Officers noted that independent maintained specialist school places could cost the council as much as £75-80,000 pounds a year per child, so any increases in those placements significantly increased costs. A change in legislation in 2014 increasing the age range of children with SEND that the Council had a duty to support from 18 to 25 also increased the numbers of children and young people requiring support, in turn increasing costs. Options to provide support in a mainstream setting were being explored to reduce costs and the Council was progressing its own special school.

·             Regarding the driving forces of the increase in EHCPs, Nigel Chapman explained that the 2014 EHCP reforms had caused considerable growth in demand. The system was now weighted more favourably towards parental preference, and, where parents had been unhappy with the decision of a local authority regarding an EHCP and took that to tribunal, 96% of cases were won by the parent, with no balance in the system for the local authority and professionals to challenge those decisions. At the same time, there had been a general increase in awareness of SEND, particularly autism where there was the greatest growth, resulting in more parents coming to professionals for help. Likewise, the reduced stigma in seeking help and the extended age range of up to 25 years old also drove growth.

·             The Committee heard that agency work did not significantly impact the deficit, as a large number of staff were employed from the local authority and some were funded through the General Fund, although there was pressure around Educational Psychologists.

·             In noting that Central Government planned a 20% VAT increase, the Committee queried whether that increase would impact on the deficit. They were advised that the VAT on private schools would not apply to independent maintained schools where EHCPs were state funded but the Council were still awaiting the policy on that.

·             The Committee noted that school exclusion numbers had increased and asked whether that had been factored into the work being done. Officers noted that exclusions, permanent or otherwise, were relatively low in Brent, although elsewhere there were schools that were struggling to manage behaviours that staff felt ill-equipped to manage and were using exclusion as a tool to manage that. In Brent, alternative provisions at Brent River College and Roundwood School were made available, where there was a requirement for those schools to reintegrate children back into mainstream schools.

·             On the subject of the statutory override coming to an end in 2025/26, the Committee asked whether there had been any discussions on a ‘middle ground’ where Councils paid a certain amount of their deficits from General Fund reserves and the government made interventions where necessary. Minesh Patel explained that any option where the Council used ringfenced reserves would need to be communicated to residents to explain how funds were now going towards education.

·             The Committee asked what measures were being taken to lobby the government on the issue, including with other London boroughs. Officers noted that the incoming government had recognised the pressure in the system and that the proposed plan set up in 2023 was not enough to mitigate the pressures. London Councils had been lobbying the DFE. Likewise, the LGA and Isops Partnership were releasing a report diagnosing the problem and putting forward a blueprint with recommendations for how the system should run, set to be released in the next few days following the meeting. Officers added that parents' had a perception that EHCPs were the first and only source of help and schools needed to take an early intervention approach in order to change that, which was another primary objective being lobbied for.

·             Regarding newly established SEND School places, the Committee asked if 400 places were enough to fulfil students' needs. Members were aware of some parents’ whose children were attending schools in other boroughs such as Barnet, who had expressed a wish to keep their children in those schools as opposed to moving them to schools with additional placements or the new special school. Noting the difficulty of getting parents to move their children, officers were asked if these cases would create significant financial constraints on the budget if the Council was required to pay more for out of borough placements. Officers responded that only the most complex cases cost £70-80,000 per child, with many children being sent to affordable placements outside of the borough. The new special school being built would have 150 places for secondary age pupils based on the business case showing the demand in the system. Recognising that parents would initially be reluctant to move their child with an EHCP, the Council had factored in a staggered move into the school, with between 60-70 children placed when the school opened and that gradually increasing.

·             Members were advised that every child with an EHCP, even if they were in an out of borough school, would have an annual review, and at the age of 14 the school would plan with the child’s family what support they would need when they reached 16. This gave the opportunity to step down some support if it was no longer needed or vice versa, but also gave the opportunity to look at moving the child to local provision at a sensible point in time where appropriate.

·             Noting the backlog in access to Occupational Therapy for pupils, members queried whether clearing that backlog would result in increased costs, as there would be a potential for an increase in EHCPs. Nigel Chapman advised the Committee that, as part of the action plan submitted to DfE, the Council had made projections on what the growth of EHCPs was expected to be. Taking into account the Council’s intervention focused approach, it was expected that EHCPs would grow at a slower rate in future at around 4-5% per annum, and that figure was then used as the target measure.

·             The Committee asked how Brent’s deficit compared to other local authorities and what the national average was to help inform political solutions. Minesh Patel responded, noting that 65% of all local authorities had accumulated deficit with a combined total of £1.6 billion. He stated that the additional supplement was insufficient and while Brent had managed to maintain the deficit well it had not reduced and equated to around 3% of the total DSG Brent received. Other Councils had been less successful and had growing deficits, some of which equated to as much as 39% of their DSG. Officers agreed to obtain data regarding where Brent compared to the rest of London.

·             Noting the role of the NHS in providing support, officers asked if this was enough. Officers stated that at an Integrated Care Board (ICB) level, the partnership worked well together to support the council’s objectives, particularly in the areas of speech and language therapy and assessment work. Officers noted a need for improvement in mental health and well-being support, particularly child and adolescent mental health services, where a business case had been made for levelling up funding which was still with the ICB for a decision.

·             The Committee noted the cost of transport and asked whether more efficiency could be found there. Officers stated that transport had recently been moved under the Children, Young Peoples and Families Department and that Cabinet had agreed a new transport policy. The new policy included the offer of independent travel training for children and young people capable to travel on their own and the use of alternative modes of transport was being looked into. An action plan was also noted to be in place to address the issue of transport costs. In response to whether the opening of the new special school would increase transport costs, officers highlighted that the new school would have a positive impact on the transport budget because children would be retained within the borough who would have otherwise needed to travel out of borough.

·             Discussing the Delivering Better Value (DBV) program the Committee asked what the remaining funding would be spent on. Officers highlighted that the workstreams were detailed in the report and focused on staffing for people working with schools, such as those working on the intervention first programme, commissioning arrangements, post-16 work, and the SEND Assurance Programme which aimed to manage the numbers of EHCPs in schools and levels of support provided by EHCPs.

·             Responding to a query about section 6.1.2 of the report - SEND assurance to support the efficiency of 2 primary schools - Shirley Parks (Director Education, Safeguarding and Partnerships, Brent Council) explained that where a school had a large number of children with high levels of support identified, audits had been undertaken to see whether those levels of support were appropriate or could be reduced. The SEND Support Team had subsequently developed an approach to reviewing how needs were met where schools had high numbers of EHCPs with significant support needs and was working with 2 primary schools to develop a model of support for efficiency that could be then used for other schools. Officers agreed to send the details of those schools to the Committee (Shirley Parks).

As no further issues were raised the Chair thanked Nigel Chapman and Shirley Parks for the update provided.

The Committee RESOLVED to note the historical context to the deficit of the High Needs Block and the actions in place to reduce the deficit, including the DSG Deficit Management Plan and the Delivering Better Value in SEND programme as detailed within the report.  In commending officers for their efforts the Committee requested to be kept updated on the ongoing progress regarding delivery of the DSG deficit recovery plan.